[Federal Register: November 24, 1999 (Volume 64, Number 226)] [Proposed Rules] [Page 66115-66116] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr24no99-15] ======================================================================= ----------------------------------------------------------------------- FEDERAL HOUSING FINANCE BOARD 12 CFR Parts 917, 925, 930, 940, 950, 954, 955, 958, 965, 966, and 980 [No. 99-57] RIN 3069-AA84 Federal Home Loan Bank Financial Management and Mission Achievement; Withdrawal of Proposed Rule; Notice of Cancellation of Public Hearing AGENCY: Federal Housing Finance Board. ACTION: Withdrawal of proposed rule; Notice of cancellation of public hearing. ----------------------------------------------------------------------- SUMMARY: The Federal Housing Finance Board (Finance Board) is withdrawing its recently-proposed Financial Management and Mission Achievement (FMMA) regulation in light of the enactment of the Federal Home Loan Bank System Modernization Act of 1999 (Bank System Modernization Act). Although the Finance Board is withdrawing the proposed FMMA regulation, it intends to re-propose certain sections of the FMMA regulation in one or more separate rulemakings. However, the Finance Board will take no action to promulgate proposed or final regulations limiting Federal Home Loan Bank (Bank) assets or advances beyond those currently in effect, except to the extent necessary to protect the safety and soundness of the Banks, until the Finance Board has promulgated final capital regulations pursuant to the requirements of the Bank System Modernization Act and the statutory period for submission of capital plans by the Banks to the Finance Board has expired. The Finance Board also hereby is canceling the public hearing on the proposed FMMA regulation scheduled for November 29 and 30, 1999. FOR FURTHER INFORMATION CONTACT: James L. Bothwell, Director and Chief Economist, (202) 408-2821; or Scott L. Smith, Deputy Director, (202) 408-2991, Office of Policy, Research and Analysis, Federal Housing Finance Board, 1777 F Street, NW, Washington, DC 20006. SUPPLEMENTARY INFORMATION: I. Background The Finance Board proposed a regulation in the Federal Register of September 27, 1999 to adopt new financial management and mission achievement rules, and amend certain existing regulations, for the Banks. See 64 FR 52163 (Sept. 27, 1999). The preamble to the proposed FMMA regulation contains a detailed discussion of the background and reasons for the proposed FMMA regulation. Generally, the proposed FMMA regulation would have modernized policies governing the business activities of the Banks and, for the first time, would have established regulatory standards for mission achievement by the Banks and a definition of mission assets. The proposal would have enabled the Banks to help their members be more effective competitors in the housing finance and community lending marketplace, which in turn would have assured that benefits accrued to consumers. The proposal would have imposed a risk-based capital requirement, pursuant to which each Bank would have been required to maintain capital based on the credit, market, and operations risks to which it is exposed. The risk-based capital regime was designed to build upon the regulatory framework used by other financial institution and government-sponsored enterprise (GSE) regulators. The mission achievement requirement in the proposal would have: codified the authority of the Banks to hold mortgage assets, including mortgage-backed securities; allowed mortgage assets [[Page 66116]] meeting certain regulatory requirements to be counted as mission assets; and eliminated the use of the Banks' GSE advantages in issuing debt to fund arbitrage investments. The proposal also would have specified the responsibilities of the boards of directors and senior management of the Banks, as a means of ensuring that they fulfill their duties in operating the Banks in a safe and sound manner and in furtherance of their mission. In a separate rulemaking, the Finance Board proposed to reorganize its regulations to implement a more logical and efficient presentation of the rules governing the Banks and the Bank System, as well as to prepare for the anticipated incorporation of the revisions to be made by the FMMA proposal. See 64 FR 52148 (Sept. 27, 1999). In view of the technical, housekeeping nature of the proposed reorganization provisions, the Finance Board is not withdrawing the proposed reorganization regulation, which the Finance Board intends to finalize, with any necessary amendments, at the earliest practicable date. The comment period for the proposed reorganization regulation closes December 27, 1999. II. Reasons for Withdrawal of the Proposed FMMA Regulation In light of the enactment of the Bank System Modernization Act, the Finance Board is withdrawing the proposed FMMA regulation. The Finance Board intends to re-propose certain sections of the proposed regulation in one or more separate rulemakings, and to propose capital requirements for the Banks in accordance with the Bank System Modernization Act. However, the Finance Board will take no action to promulgate proposed or final regulations limiting Bank assets or advances beyond those currently in effect, except to the extent necessary to protect the safety and soundness of the Banks, until the Finance Board has promulgated final capital regulations pursuant to the requirements of the Bank System Modernization Act and the statutory period for submission of capital plans by the Banks to the Finance Board has expired. The Finance Board will consult with the House and Senate Banking Committees regarding the content of both the capital regulations and any financial management or mission related regulations prior to issuing them in proposed form. III. Cancellation of Public Hearing In the SUPPLEMENTARY INFORMATION to the proposed FMMA regulation, the Finance Board announced that it would hold a public hearing on its proposed FMMA regulation. See 64 FR 52165. The hearing was scheduled to be held on November 29-30, 1999. As a result of the Finance Board's action herein to withdraw the proposed FMMA regulation, the public hearing is no longer necessary and is cancelled. List of Subjects in 12 CFR Parts 917, 925, 930, 940, 950, 954, 955, 958, 965, 966 and 980 Community development, Credit, Housing and Federal home loan banks. Dated: November 17, 1999. By the Board of Directors of the Federal Housing Finance Board. Bruce A. Morrison, Chairman. [FR Doc. 99-30552 Filed 11-23-99; 8:45 am] BILLING CODE 6725-01-P